What Is Power of Attorney?
Power of attorney, or POA, allows a person of your choosing to manage your financial or medical affairs if you are unable to do so.
Without a POA in place, If you become incapacitated, the court will have to appoint a guardian or conservator. that course of action takes time and money.
The person you choose to act on your behalf as your power of attorney is also referred to as your ‘agent’ or ‘attorney-in-fact’.
However, not all powers of attorney were created equal. They are categorized into five main types. Limited, general, springing, durable, and medical. Each type gives your POA a different level of control.
What is a Limited (Special) Power of Attorney?
This particular Power of Attorney is usually specific to a certain task or time frame. Often used when one cannot handle certain affairs due to other commitments or health reasons.
Some of the common matters specified in a special power of attorney document include managing real estate, collecting debts, and handling business transactions. A limited POA ends at a time specified in the document.
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What is a General Power of Attorney?
This Power of Attorney is pretty comprehensive and gives your attorney-in-fact all the powers and rights that you have when it comes to financial matters. Sign documents for you, pay your bills, and handle financial and business transactions. This type of Power of attorney is usually a part of your Estate Planning documents.
You could use a general Power of Attorney if you were not incapacitated but still needed someone to help you with financial matters. But, the general power of attorney ends immediately once you have passed away or become incapacitated.
What is a Springing Power of Attorney?
Your springing POA has the same amount of control over your affairs as a general POA would, but it does not actually become effective until you are incapacitated.
If you are using a springing power of attorney, it is very important that the standard for determining incapacity and triggering the POA be clearly laid out in the document itself.
What is a Durable Power of Attorney?
With a DPOA, your agent still has the same duties as a general POA, but it remains in effect after you become incapacitated. Without a durable power of attorney, it’s basically a general POA. You will have no representation if you suddenly become incapacitated.
Durable Power of Attorney also ends upon your death, just like a general Power of Attorney. The only difference is whether you are covered in case of an accident.
What is a Medical Power of Attorney?
A medical Power of Attorney allows you to name a healthcare agent. Someone who will make medical decisions for you if you cannot do so yourself. A medical power of attorney becomes effective immediately after you’ve signed it. But, can only be used if you’ve been declared mentally incompetent by a physician(s).
Related Post: Statutory Power Of Attorney Issues With Self Dealing
How To Choose the Right Person To Be Your POA Agent?
Regardless of what type of POA you use, it is crucial to think carefully about who will be your attorney-in-fact. This person will have a lot of control over your finances. So it is important that you trust him or her completely.
You need someone who will look out for your best interests. Someone who respects your wishes, and won’t abuse the powers granted to him or her.
Your Attorney-in-fact is obligated to keep accurate records of all the transactions that were done on your behalf and to provide you with updates to keep you informed. If you are unable to review these updates yourself, direct your agent to a third party or appoint several POA’s.
You can legally appoint more than one agent. Several agents may act as a checks and balances system. But, they also might not agree on the right course of action and delay time-sensitive decisions. If you appoint only one agent, have a backup.
If your power of attorney agent gets sick, injured, or somehow unable to serve when the time comes, a successor agent takes over power of attorney duties from the original agent if needed.
As for legal liability, an agent is held responsible only for intentional wrongdoing. This protection is included in the power of attorney documents to encourage people to accept agent responsibilities.
If you change your mind about who you’ve appointed as your Power of Attorney, you can revoke it at any time. Simply notify your agent in writing and retrieve all copies of your POA document.
Notify any financial institutions and the County Clerk’s office, if applicable, that your agent’s POA has been revoked.
Related Post: 5 Everyday Events That Affect Your Estate Plan
How to Get a Power of Attorney?
It is not necessary to use an attorney in order to execute a POA. But it is the smart thing to do. After all, attorneys are there for a reason. One of those reasons is that they know the law. They can advise you on who you should choose as your agent and whether your document meets all legal requirements.
Each state has its own legislation and wording when it comes to such legal matters but if you are here in CT, this would be the resource page to reference.
All you’ll have to do is sign on the dotted line. Your attorney will notarize the document and provide you with several certified copies.
Banks and other businesses will not allow your agent to act on your behalf unless they receive a certified copy of the power of attorney. Furthermore, the right Estate Planning attorney may open your eyes to a number of other legal documents you may need that you probably didn’t even know existed.
Marketing & Technology Director at RWC, LLC, Attorneys & Counselors at Law
Ukraine born and Israel / Miami, FL raised. University of Miami graduate in the Marketing field.
Mom to a girl, a boy, and a Siberian Husky.